SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

[X]   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE 
      ACT OF 1934
      For the fiscal year ended December 31, 1997
                                    OR

[ ]   TRANSITION  REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE  ACT OF 1934  For  the  transition  period  from  ________  to
      ________

         Commission File No. 33-55254-14

                           PACIFIC FOREST CORPORATION
        (Exact name of small business issuer as specified in its charter)

       NEVADA                                  87-0438451
(State or other jurisdiction of                    (I.R.S. Employer
incorporation or organization)                    Identification Number)

73 SOUTH PALM AVENUE, SUITE 223
SARASOTA, FLORIDA                                         34236
(Address of principal executive offices)                (Zip Code)

Issuer's telephone number, including area code (941) 957-1009

Securities registered pursuant to Section 12(b) of the Act: NONE

Securities registered pursuant to Section 12(g) of the Act: NONE

Indicate by check mark whether the issuer (1) has filed all reports  required to
be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. [X] Yes [ ] No

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated  by reference  in Part III of this Form 10-KSB or any  amendment to
this Form 10-KSB. [X]

State issuer's revenues for its most recent fiscal year $0

As of January 13, 1998 the  aggregate  market  value of the voting stock held by
non-affiliates of the registrant is approximately $162,500

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practicable date.

            Class                             Outstanding as of January 14, 1998
-------------------------------------         ----------------------------------
$.001 PAR VALUE CLASS A COMMON STOCK                    1,200,000 SHARES

                      DOCUMENTS INCORPORATED BY REFERENCE :
                                      None

Transitional Small Business Disclosure Format:   [ ] Yes [X] No


<PAGE>



                                     PART I

ITEM 1.  Business.

         The Company was  incorporated  under the laws of Utah on April 16, 1986
as Zeus Enterprises,  Inc. and subsequently reorganized under the laws of Nevada
on December 30, 1993. The Company's  reorganization  plan was formulated for the
purpose of changing the state of domicile  and provided  that the Company form a
new  corporation  in Nevada which acquired all of the  contractual  obligations,
shareholder  rights  and  identity  of the Utah  corporation,  and then the Utah
corporation was dissolved.  The Company is in the  developmental  stage, and its
operations  have been very  limited.  The  Company  has been in the  process  of
investigating  potential  business ventures which, in the opinion of management,
would  provide a source of eventual  profit to the Company.  On May 31, 1996 the
name was changed to Pacific Forest Corporation.

During June of 1996,  the Company  acquired a subsidiary in Fiji and intended to
operate in the timber processing industry.  However, the necessary capital could
not be raised and the  transactions  with the Fijian  subsidiary  were reversed,
effective December 31, 1996.

         The Company will continue to try to expand through future  acquisitions
and will be  extremely  limited in its  attempts  to locate  potential  business
situations for investigation.  The Company plans to continue on a limited basis,
the process of  investigating  possible merger and acquisition  candidates,  and
believes that the Company's  status as a publicly-held  corporation will enhance
its ability to locate such potential business ventures.

         Management  anticipates that, due to its lack of funds, and the limited
amount of its resources,  the Company may be restricted to participation in only
one  potential  business  venture.  This  lack  of  diversification   should  be
considered a  substantial  risk because it will not permit the Company to offset
potential losses from one venture against gains from another.

         The analysis of business  opportunities  will be undertaken by or under
the  supervision  of the Company's  management,  none of whom is a  professional
analyst and none of whom have significant general business experience. Among the
factors  which  management  will  consider  in  analyzing   potential   business
opportunities are the available technical,  financial and managerial  resources;
working capital and financial  requirements;  the history of operation,  if any;
future prospects; the nature of present and anticipated  competition;  potential
for  further  research,   development  or  exploration;   growth  and  expansion
potential;  profit potential;  the perceived public recognition or acceptance of
products or services; name identification, and other relevant factors.

         It is not  possible at present to predict the exact manner in which the
Company may  participate in future  business  opportunities.  Specific  business
opportunities  will be reviewed  and,  based upon such review,  the  appropriate
legal structure or method of  participation  will be decided upon by management.
Such structures and methods may include,  without limitation,  leases,  purchase
and  sale  agreements,   license,   joint  ventures;  and  may  involve  merger,
consolidation  or  reorganization.  The Company may act  directly or  indirectly
through an interest in a partnership, corporation or other form of organization.
However,  it is most likely that the Company will acquire a business  venture by
involving  the  issuance  of  the  Company's  restricted   securities.   Such  a
reorganization may involve a merger (or combination  pursuant to state corporate
statutes,  where one of the entities  dissolves or is absorbed by the other), or
it may occur as a  consolidation,  where a new entity is formed and the  Company
and such other entity combine  assets in the new entity.  A  reorganization  may
also  occur,  directly  or  indirectly,  through  subsidiaries,  and there is no
assurance   that  the  Company   would  be  the  surviving   entity.   Any  such
reorganization  could  result in  additional  dilution  to the book value of the
shares and loss of control of a majority of the shares.  The  Company's  present
director may be required to resign in connection with a reorganization.

         A  reorganization  may be structured in such a way as to take advantage
of certain beneficial tax consequences available in business reorganizations, in
accordance  with  provisions of the Internal  Revenue Code of 1986 (as amended).
Pursuant  to  such  a  structure,  the  number  of  shares  held  prior  to  the
reorganization  by all of the Company's  shareholders  might be less than 20% of
the  total  shares  to be  outstanding  upon  completion  of the  trans  action.
Substantial  dilution of percentage  equity ownership may result to the minority
shareholders, in the discretion of management.


                                        2

<PAGE>



         Generally,  the issuance of securities in a reorganization  transaction
would  be  undertaken  in  reliance  upon  one  or  more   exemptions  from  the
registration  provisions of applicable  federal  securities laws,  including the
exemptions  provided  for  non-public  or limited  offerings,  distributions  to
persons resident in only one state and similar exemptions provided by state law.
Shares issued in a reorganization  transaction based upon these exemptions would
be  considered  "restricted"  securities  under the 1933  Act,  and would not be
available  for  resale  for a period of one year,  in  accordance  with Rule 144
promulgated  under  the 1933 Act.  However,  the  Company  might  undertake,  in
connection  with  such  a  reorganization   transaction,   certain  registration
obligations in connection with such securities.

         The  Company  may  choose  to  enter  into  a  venture   involving  the
acquisition  of or  merger  with a  company  which  does  not  need  substantial
additional  capital but desires to  establish  a public  trading  market for its
securities.  Such a company may desire to consolidate  its  operations  with the
Company  through  a  merger,   reorganization,   asset  acquisition,   or  other
combination,  in order to avoid possible adverse consequences of undertaking its
own public offering.  (Such consequences might include expense,  time delays, or
loss of  voting  control.)  In the event of such a merger,  the  Company  may be
required to issue significant  additional shares, and it may be anticipated that
control over the Company's  affairs may be transferred to others. It should also
be noted that this type of business  venture  might have the effect of depriving
the  original  minority  shareholders  of the  protection  of federal  and state
securities  laws,  which  normally  affect the process of a  company's  becoming
publicly held.

         It  is  likely  that  the   investigation  and  selection  of  business
opportunities  will be complex,  time-consuming  and extremely  risky.  However,
management believes that even though the Company will have limited capital,  the
fact  that  its  securities  will be  publicly-held  will  make it a  reasonably
attractive business prospect for other firms.

         As  part of  their  investigation  of  acquisition  possibilities,  the
Company's  management may meet with  executive  officers of the business and its
personnel;  inspect its facilities;  obtain independent analysis or verification
of the  information  provided,  and conduct other  reasonable  measures,  to the
extent permitted by the Company's  limited  resources and  management's  limited
expertise.  Generally,  the Company  intends to analyze and make a determination
based upon all available  information without reliance upon any single factor as
controlling.

         In all likelihood,  the Company's  management will be  inexperienced in
the areas in which potential  businesses  will be investigated  and in which the
Company may make an acquisition or investment. Thus, it may become necessary for
the  Company  to retain  consultants  or  outside  professional  firms to assist
management in evaluating potential  investments,  and to hire managers to run or
oversee the operations of its acquisitions or investments.  The Company can give
no assurance that it will be able to find suitable consultants or managers.  The
Company  intends not to employ any of its  affiliates,  officers,  directors  or
principal  shareholders as consultants.  The Company has no policy regarding the
use of consultants,  however, if management, in its discretion,  determines that
it is in the best interests of the Company,  management may seek  consultants to
review  potential merger or acquisition  candidates.  It is anticipated that the
total  amount  of fees  paid to any  consultant  would  not  exceed  $5,000  per
transaction. The fee, it is anticipated,  would be paid by the Company or by the
potential target company. There are currently no contracts or agreements between
any  consultant and any companies that are searching for companies with which to
merge.

         It may be  anticipated  that the  investigation  of  specific  business
opportunities   and  the   negotiation,   drafting  and  execution  of  relevant
agreements,  disclosure documents and other instruments will require substantial
management time and attention, and substantial costs for accountants,  attorneys
and  others.  Should  a  decision  thereafter  be made not to  participate  in a
specific  business  opportunity,  it is likely that costs already expended would
not be  recoverable.  It is  also  likely,  in the  event a  transaction  should
eventually  fail to be consummated,  for any reason,  that the costs incurred by
the Company would not be recoverable.  The Company's  officers and directors are
entitled to reimbursement  for all expenses  incurred in their  investigation of
possible  business  ventures on behalf of the Company,  and no assurance  can be
given that if the Company has available  funds they will not be depleted in such
expenses.

         In addition to the severe limitations placed upon the Company by virtue
of its  limited  funded  status,  the  Company  will  also  be  limited,  in its
investigation  of possible  acquisitions,  by the reporting  requirements of the
Securities  Exchange Act of 1934,  pursuant to which certain information must be
furnished in connection with any significant acquisitions.  The Company would be
required to furnish,  with  respect to any  significant  acquisition,  certified
financial statements for the acquired company,  covering one, two or three years
(depending upon the relative size of the acquisition). Consequently, acquisition
prospects which do not have the requisite certified financial

                                        3

<PAGE>



statements,  or are unable to obtain them, may be inappropriate  for acquisition
under the present reporting requirements of the 1934 Act.

         The Company does not intend to take any action which would render it an
investment company under The Investment  Companies Act of 1940 (the "1940 Act").
The 1940 Act defines an investment  company as one which (1) invests,  reinvests
or  trades  in  securities  as its  primary  business,  (2)  issues  face-amount
certificates of the installment type or (3) invests,  reinvests,  owns, holds or
trades  securities  or owns or  acquires  investment  securities  having a value
exceeding 40 percent of the value of its total assets  (exclusive  of Government
securities  and cash  items) on an  unconsolidated  basis.  The above 40 percent
limitation may be exceeded so long as a company is primarily  engaged,  directly
or through  wholly-owned  subsidiaries,  in a business or businesses  other than
that of investing,  reinvesting,  owning,  holding or trading in  securities.  A
wholly-owned  subsidiary  is  defined  as one which is at least 95% owned by the
company.

         Neither the Company nor any of its officers or directors are registered
as investment  advisers under the Investment Advisers Act of 1940 (the "Advisers
Act"),  and so there is no  authority  to  pursue  any  course  of  business  or
activities  which  would  render  the  Company  or  its  management  "investment
advisers" as defined in the Advisers Act.  Management believes that registration
under  the  Advisers  Act  is not  required  and  that  certain  exemptions  are
available,  including  the  exemptions  for persons  who may render  advice to a
limited number of other persons and who may advise other persons  located in one
state only.

         The Company expects to encounter intense  competition in its efforts to
locate  suitable  business   opportunities  in  which  to  engage.  The  primary
competition  for  desirable  investments  may come from  other  small  companies
organized  and funded for  similar  purposes,  from small  business  development
corporations and from public and private venture capital  organizations.  As the
Company has limited funds and other resources, it can fairly be said that nearly
all of the  competing  entities  will  have  significantly  greater  experience,
resources,  facilities,  contacts and managerial  expertise than the Company and
will,  consequently,  be in a better  position than the Company to obtain access
to, and to engage in,  business  opportunities.  Due to its limited  funds,  the
Company  may not be in a position to compete  with  larger and more  experienced
entities for business  opportunities which are low-risk.  Business opportunities
in which the Company may  ultimately  participate  are likely to be highly risky
and extremely speculative.

ITEM 2.  Properties.

         The Company owns no properties and utilizes space on a rent-free  basis
in the office of its President.  This  arrangement is expected to continue until
such  time  as  the  Company  becomes  involved  in  a  business  venture  which
necessitates its relocation, as to which no assurances can be given. The Company
has no  agreements  with respect to the  maintenance  or future  acquisition  of
office facilities, however, if a successful merger/acquisition is negotiated, it
is  anticipated  that the  office  of the  Company  will be moved to that of the
acquired company.

ITEM 3.  Legal Proceedings.

         Not Applicable.

ITEM 4.  Submission of Matters to a Vote of Security Holders.

         No matter was  submitted to the Company's  security  holders for a vote
during the fiscal year ending December 31, 1997.

                                     PART II

ITEM 5.  Market for Registrant's Common Equity and Related Stockholders Matters.

         The  Company's  common  stock is traded  over the  counter  on the NASD
Bulletin  Board  under  the  symbol  PFSS.  There  was no  market  value for the
Company's  common stock until the fourth  quarter of 1995, at which time the low
bid and the high bid was $.50 per share.  During 1996,  the stock's price ranged
from a low of $.375 to a high of $6.375.  During 1997 the stock's  price  ranged
from a low of $.06 to a high of $.37. The reported bids for the

                                        4

<PAGE>



Company's  common stock reflect  inter-dealer  prices,  without retail  mark-up,
mark-down or commission,  and may not represent actual transactions.  The latest
price in January was a bid of $.25 and ask of $.62.

         As of December,  1997,  there were 697 record  holders of the Company's
common stock.  The Company has not previously  declared or paid any dividends on
its  common  stock  and does  not  anticipate  declaring  any  dividends  in the
foreseeable future.

ITEM 6.  Management's Discussion and Analysis of Financial Condition and Results
         of Operation.

     Current  assets at  December  31,  1997 were $0 as  compared to net current
assets at December 31, 1996 of $39. The decrease in current  assets was due to a
decrease in cash of $39 related to bank service charges.

         Net loss for the  year  was  $3,814  which  consisted  of  general  and
administrative expenses.

         The Company has not received  any income as of the year ended  December
31, 1997, and has had limited operational history. All risks inherent in new and
inexperienced enterprises are inherent in the Company's business.
The  Company  has not  made a  formal  study of the  economic  potential  of any
venture.

         The Company will  continue to try to expand  through  acquisitions  and
will  be  extremely  limited  in  its  attempts  to  locate  potential  business
situations for investigation.  The Company plans to continue on a limited basis,
the process of  investigating  possible merger and acquisition  candidates,  and
believes that the Company's  status as a publicly-held  corporation will enhance
its ability to locate such potential business ventures.

         Management anticipates that due to the limited amount of its resources,
the Company may be restricted to  participation  in only one potential  business
venture.  This lack of  diversification  should be considered a substantial risk
because it will not  permit the  Company  to offset  potential  losses  from one
venture against gains from another.

ITEM 7.  Financial Statements and Supplementary Data.

         See Item 13.

ITEM 8.  Changes in and Disagreements with Accountants on Accounting and 
         Financial Disclosure.

         Not Applicable.

                                    PART III

ITEM 9.      Directors, Executive Officers, Promoters and Control Persons, 
             Compliance With Section 16(a) of the Exchange Act.

  The  following  table shows the positions  held by the  Company's  officer and
director. The director was appointed in February,  1997 and will serve until the
next annual meeting of the Company's stockholders, and until his successors have
been elected and have qualified.  The officer was appointed to his position, and
continues in such position, at the discretion of the director.

       Name                  Age                      Position
  Roger Tichenor             34                President, Director

         Roger  Tichenor has been the President and sole Director of the Company
since  February  24,  1997.  Mr.  Tichenor is  currently  President of a private
consulting company,  Phoenix Capital, Inc. He is engaged in providing advice and
counsel to small private  companies that are seeking to go public.  Mr. Tichenor
provides  consulting and strategy to public  companies  concerning  business and
financial plans,  negotiating  with potential merger and acquisition  candidates
and introductions into the financial community.

         Mr. Tichenor is 34 years of age and has been involved in the securities
business since 1987. He began in the business as a registered representative and
eventually became Branch Manager of a Chicago based stock and commodity firm. In
1993 he resigned his licenses to pursue his current endeavors.

                                        5

<PAGE>



ITEM 10.  Executive Compensation.

         The  Company  has  made no  arrangements  for the  remuneration  of its
officer and director,  except that he will be entitled to receive  reimbursement
for actual,  demonstrable  out-of-pocket expenses,  including travel expenses if
any,  made  on  the   Company's   behalf  in  the   investigation   of  business
opportunities.  No  remuneration  has  been  paid to the  Company's  officer  or
director  prior  to  the  filing  of  this  form.  There  are no  agreements  or
understandings  with respect to the amount or remuneration  that the officer and
director is expected to receive in the future. Management takes no salaries from
the Company and does not  anticipate  receiving any salaries in the  foreseeable
future.  No  present  prediction  or  representation  can  be  made  as  to  the
compensation or other remuneration which may ultimately be paid to the Company's
management,  since upon the successful  consummation of a business  opportunity,
substantial  changes  may  occur  in  the  structure  of  the  Company  and  its
management.  At such  time,  contracts  may be  negotiated  with new  management
requiring the payment of annual  salaries or other forms of  compensation  which
cannot  presently  be  anticipated.  Use of the  term  "new  management"  is not
intended to preclude the possibility that the present officer or director of the
Company  might be elected to serve in the same or  similar  capacities  upon the
Company's decision to participate in one or more business opportunities.

ITEM 11.  Security Ownership of Certain Beneficial Owners and Management.

         The following  table sets forth,  as of December 31, 1997,  information
regarding the beneficial ownership of shares by each person known by the Company
to own five percent or more of the  outstanding  shares,  by the director and by
the officer and director as a group.

<TABLE>
<CAPTION>
                                           Name and address                         Amount of              Percent
           Title of class                 of beneficial owner                 beneficial ownership     of class
<S>                                                                                     <C>               <C>   
         Common Stock          Roger Tichenor                                           450,000           37.50%
                               73 South Palm Avenue, Suite 223
                               Sarasota, Florida 34236



         Common Stock          Steve Guarino                                            100,000            8.34%
                               73 South Palm Avenue, Suite 223
                               Sarasota, Florida 34236

         Common Stock          All Officers and
                               Directors as a Group (1 person)                          450,000           37.50%
</TABLE>

ITEM 12.  Certain Relationships and Related Transactions.

     No officer,  director,  nominee for election as a director, or associate of
such officer,  director or nominee is or has been in debt to the Company  during
the last  fiscal  year.  However,  the  Company's  officer,  director  and major
shareholder,  have made an oral  undertaking  to make  loans to the  Company  in
amounts sufficient to enable it to satisfy its reporting  requirements and other
obligations  incumbent on it as a public company, and to commence,  on a limited
basis, the process of investigating possible merger and acquisition  candidates.
The Company's  status as a publicly-held  corporation may enhance its ability to
locate  potential  business  ventures.  The loans will be interest  free and are
intended  to be repaid  at a future  date,  if or when the  Company  shall  have
received  sufficient  funds  through  any  business  acquisition.  The loans are
intended to provide for the payment of filing fees,  professional fees, printing
and copying fees and other miscellaneous fees.

                                     PART IV

ITEM 13.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K.

         Financial Statements and Financial Statement Schedules.
         Financial Statements - December 31, 1997, 1996 and 1995

         Exhibit 27
         Financial Data Summary

         Reports on Form 8-K.
         None.


                                        6

<PAGE>



                                   SIGNATURES

         Pursuant to the  requirements  of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.


                                          PACIFIC FOREST CORPORATION

Date:    January 22, 1998                 By:     /s/ Roger Tichenor
      -------------------------              -----------------------
                                          Roger Tichenor, President and Director

         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
this  report has been  signed  below by the  following  persons on behalf of the
registrant and in the capacities and on the dates indicated.

Date:    January 22, 1998             By:     /s/ Roger Tichenor
     --------------------------          -----------------------
                                      Roger Tichenor, President and Director








                                        7

<PAGE>



     Supplemental Information to be Furnished With Reports Filed Pursuant to
  Section 15(d) of the Act by Registrants Which Have Not Registered Securities
                        Pursuant to Section 12 of the Act



     No annual  report or proxy  material has been sent to security  holders for
the fiscal  year  ending  December  31,  1997,  nor is any such  report or proxy
material to be furnished  to security  holders  subsequent  to the filing of the
annual report of this Form.



                                        8

<PAGE>


                                 SMITH & COMPANY
                          CERTIFIED PUBLIC ACCOUNTANTS

MEMBERS OF:                                     CRANDALL BUILDING SUITE 700
AMERICAN INSTITUTE OF                           10 WEST 100 SOUTH
     CERTIFIED PUBLIC ACCOUNTANTS               SALT LAKE CITY, UTAH 84101
UTAH ASSOCIATION OF                             TELEPHONE:       (801) 575-8297
     CERTIFIED PUBLIC ACCOUNTANTS               FACSIMILE:       (801) 575-8306
-------------------------------------------------------------------------------



                          INDEPENDENT AUDITOR'S REPORT


Board of Directors
Pacific Forest Corporation (A Development Stage Company)

We have audited the accompanying balance sheets of Pacific Forest Corporation (a
development  stage  company) as of December  31, 1997 and 1996,  and the related
statements of operations,  changes in stockholders'  equity (deficit),  and cash
flows for the years ended  December 31, 1997,  1996, and 1995 and for the period
of April 16, 1986 (date of  inception)  to December  31, 1997.  These  financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the financial position of Pacific Forest Corporation (a
development  stage  company) as of December 31, 1997 and 1996 and the results of
its operations, changes in stockholders' equity (deficit) and its cash flows for
the years ended  December 31, 1997,  1996,  and 1995 and for the period of April
16, 1986 (date of inception) to December 31, 1997 in conformity  with  generally
accepted accounting principles.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company will continue as a going concern.  As shown in the financial  statements
at December  31, 1997 the Company  has an  accumulated  deficit of $57,000.  The
Company has suffered losses and has a substantial need for working capital. This
raises  substantial  doubt about its  ability to  continue  as a going  concern.
Management's  plans in regard to these  matters are  described  in Note 5 to the
financial statements.  The accompanying  financial statements do not include any
adjustments that may result from the outcome of this uncertainty.


                                        /s/   Smith & Company
                                        CERTIFIED PUBLIC ACCOUNTANTS


Salt Lake City, Utah
January 13, 1998

                                       F-1

<PAGE>



                           PACIFIC FOREST CORPORATION
                          (A Development Stage Company)
                                 BALANCE SHEETS



<TABLE>
<CAPTION>
                                                                                               December 31,
                                                                                      1997                    1996
                                                                                 -----------------     -----------------
             ASSETS
CURRENT ASSETS
<S>                                                                              <C>                   <C>              
         Cash in bank                                                            $               0     $              39
                                                                                 -----------------     -----------------

                      TOTAL CURRENT ASSETS                                                       0                    39

OTHER ASSETS
         Organization costs (Note 1)                                                             0                     0
                                                                                 -----------------     -----------------
                                                                                                 0                     0
                                                                                 -----------------     -----------------

                                                                                 $               0     $              39
                                                                                 =================     =================

             LIABILITIES & EQUITY (DEFICIT)
CURRENT LIABILITIES
         Accounts payable                                                        $               0     $           1,225
                                                                                 -----------------     -----------------

                      TOTAL CURRENT LIABILITIES                                                  0                 1,225

STOCKHOLDERS' EQUITY (DEFICIT) 
         Common Stock $.001 par value:
         Authorized - 100,000,000 shares
         Issued and outstanding
         1,200,000 shares (1,100,000 at 12-31-96)                                            1,200                 1,100
         Additional paid-in capital                                                         55,800                50,900
         Deficit accumulated during
          the development stage                                                            (57,000)              (53,186)
                                                                                 -----------------     -----------------

                      TOTAL STOCKHOLDERS' EQUITY (DEFICIT)                                       0                (1,186)
                                                                                 -----------------     -----------------

                                                                                 $               0     $              39
                                                                                 =================     =================
</TABLE>

See Notes to Financial Statements.


                                       F-2

<PAGE>



                           PACIFIC FOREST CORPORATION
                          (A Development Stage Company)
                            STATEMENTS OF OPERATIONS



<TABLE>
<CAPTION>
                                                                                                       4/16/86
                                                                                                      (Date of
                                                              Year Ended December 31,                inception) to
                                                   1997               1996              1995            12/31/97
                                                ------------      -----------        -----------     --------------
<S>                                             <C>               <C>                <C>             <C>           
Net sales                                       $          0      $         0        $         0     $            0
Cost of sales                                              0                0                  0                  0
                                                ------------      -----------        -----------     --------------

                      GROSS PROFIT                         0                0                  0                  0


General & administrative
 expenses                                              3,814           51,186                  0             57,000
                                                ------------      -----------        -----------     --------------

                          NET LOSS              $     (3,814)     $   (51,186)       $         0     $      (57,000)
                                                ============      ===========        ===========     ==============


Net income (loss) per weighted
 average share                                  $       (.00)     $      (.05)       $       .00
                                                ============      ===========        ===========


Weighted average number of
 common shares used to compute
 net income (loss) per weighted
 average share                                     1,120,833        1,100,000          1,000,000
                                                ============      ===========        ===========
</TABLE>








See Notes to Financial Statements.


                                       F-3

<PAGE>



                           PACIFIC FOREST CORPORATION
                          (A Development Stage Company)
             STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)



<TABLE>
<CAPTION>
                                                                                                                      Deficit
                                                                                                                    Accumulated
                                                                     Common Stock               Additional            During
                                                                   Par Value $0.001               Paid-in           Development
                                                               Shares            Amount           Capital              Stage
                                                            -------------    -------------   -----------------  ------------------
<S>                                                         <C>              <C>             <C>                <C>               
Balances at 4/16/86 (Date of inception)                                 0    $           0   $               0  $                0
   Issuance of common stock (restricted) at
     $.002 per share at 4/16/86                                 1,000,000            1,000               1,000
   Net loss for period                                                                                                      (1,950)
                                                            -------------    -------------   -----------------  ------------------
Balances at 12/31/86                                            1,000,000            1,000               1,000              (1,950)
   Net loss for year                                                                                                           (10)
                                                            -------------    -------------   -----------------  ------------------
Balances at 12/31/87                                            1,000,000            1,000               1,000              (1,960)
   Net loss for year                                                                                                           (10)
                                                            -------------    -------------   -----------------  ------------------
Balances at 12/31/88                                            1,000,000            1,000               1,000              (1,970)
   Net loss for year                                                                                                           (10)
                                                            -------------    -------------   -----------------  ------------------
Balances at 12/31/89                                            1,000,000            1,000               1,000              (1,980)
   Net loss for year                                                                                                           (10)
                                                            -------------    -------------   -----------------  ------------------
Balances at 12/31/90                                            1,000,000            1,000               1,000              (1,990)
   Net loss for year                                                                                                           (10)
                                                            -------------    -------------   -----------------  ------------------
Balances at 12/31/91                                            1,000,000            1,000               1,000              (2,000)
   Net income for year                                                                                                           0
                                                            -------------    -------------   -----------------  ------------------
Balances at 12/31/92                                            1,000,000            1,000               1,000              (2,000)
   Net income for year                                                                                                           0
                                                            -------------    -------------   -----------------  ------------------
Balances at 12/31/93                                            1,000,000            1,000               1,000              (2,000)
   Net income for year                                                                                                           0
                                                            -------------    -------------   -----------------  ------------------
Balances at 12/31/94                                            1,000,000            1,000               1,000              (2,000)
   Issuance of common stock (restricted)
     at $.50 per share at 9/12/95                                 100,000              100              49,900
   Net income for year                                                                                                           0
                                                            -------------    -------------   -----------------  ------------------
Balances at 12/31/95                                            1,100,000            1,100              50,900              (2,000)
   Issuance of common stock (Regulation S) at $.9796
     per share to acquire subsidiary at 6/28/96 (1)               100,000              100              97,860
   Issuance of common stock (Regulation S) at $8.73
     per share to retire debt of subsidiary at 6/28/96(2)          45,000               45             392,857
   Issuance of common stock (Regulation S) at $10.00
     per share to acquire subsidiary at 8/23/96 (3)               200,000              200           1,999,800
   Stock canceled (1) (Note 6)                                   (100,000)            (100)            (97,860)
   Stock canceled (2) (Note 6)                                    (45,000)             (45)           (392,857)
   Stock canceled (3) (Note 6)                                   (200,000)            (200)         (1,999,800)
   Net loss for year                                                                                                       (51,186)
                                                            -------------    -------------   -----------------  ------------------
Balances at 12/31/96                                            1,100,000            1,100              50,900             (53,186)
   Issuance of common stock to officer at $.05 per
     share to retire debt at 10/12/97                             100,000              100               4,900
   Net loss for year                                                                                                        (3,814)
                                                            -------------    -------------   -----------------  ------------------

Balances at 12/31/97                                            1,200,000    $       1,200   $          55,800  $          (57,000)
                                                            =============    =============   =================  ==================
</TABLE>


See Notes to Financial Statements.


                                       F-4

<PAGE>



                           PACIFIC FOREST CORPORATION
                          (A Development Stage Company)
                            STATEMENTS OF CASH FLOWS



<TABLE>
<CAPTION>
                                                                                                     4/16/86
                                                                                                    (Date of
                                                         Year Ended December 31,                  inception) to
                                                1997             1996               1995             12/31/97
                                           --------------    --------------    --------------    ---------------
OPERATING ACTIVITIES
<S>                                        <C>               <C>               <C>               <C>            
     Net income (loss)                     $       (3,814)   $      (51,186)   $            0    $      (57,000)
     Adjustments to reconcile net
     income (loss) to cash used by
     operating  activities:
         Amortization                                   0                 0                 0                50
     Changes in liabilities:
         Accounts payable                          (1,225)            1,225                 0                 0
                                           --------------    --------------    --------------    --------------

                      NET CASH USED BY
                  OPERATING ACTIVITIES             (5,039)          (49,961)                0           (56,950)

INVESTING ACTIVITIES
     Organization costs                                 0                 0                 0               (50)
                                           --------------    --------------    --------------    --------------

                      NET CASH USED BY
                  INVESTING ACTIVITIES                  0                 0                 0               (50)

FINANCING ACTIVITIES
     Proceeds from sale of
      common stock                                  5,000                 0            50,000            57,000
                                           --------------    --------------    --------------    --------------

                  NET CASH PROVIDED BY
                  FINANCING ACTIVITIES              5,000                 0            50,000            57,000
                                           --------------    --------------    --------------    --------------

                INCREASE (DECREASE) IN
                         CASH AND CASH
                           EQUIVALENTS                (39)          (49,961)           50,000                 0

     Cash and cash equivalents
     at beginning of year                              39            50,000                 0                 0
                                           --------------    --------------    --------------    --------------

               CASH & CASH EQUIVALENTS
                        AT END OF YEAR     $            0    $           39    $       50,000    $            0
                                           ==============    ==============    ==============    ==============
</TABLE>




See Notes to Financial Statements.


                                       F-5

<PAGE>
                           PACIFIC FOREST CORPORATION
                          (A Development Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 1997 and 1996


NOTE 1:       SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
              Accounting Methods:
              The Company  recognizes  income and expenses based on the accrual
              method of accounting.

              Dividend Policy:
              The Company has not yet adopted any policy  regarding  payment of
              dividends.

              Organization Costs:
              The  Company  amortized  its  organization  costs over a five year
              period.

              Cash and Cash Equivalents:
              For financial statement purposes, the Company considers all highly
              liquid  investments  with an original  maturity of three months or
              less when purchased to be cash equivalents.

              Estimates:
              The  preparation  of  financial   statements  in  conformity  with
              generally accepted  accounting  principles  requires management to
              make estimates and assumptions that affect the reported amounts of
              assets and liabilities  and  disclosures of contingent  assets and
              liabilities  at the  date  of the  financial  statements  and  the
              reported  amount of revenue  and  expenses  during  the  reporting
              period. Actual results could differ from those estimates.

              Income Taxes:
              The Company  records the income tax effect of  transactions in the
              same year that the  transactions  enter into the  determination of
              income, regardless of when the transactions are recognized for tax
              purposes. Tax credits are recorded in the year realized. Since the
              Company has not yet realized income as of the date of this report,
              no provision for income taxes has been made.

              In  February,  1992,  the  Financial  Accounting  Standards  Board
              adopted  Statement  of  Financial  Accounting  Standards  No. 109,
              Accounting for Income Taxes,  which supersedes  substantially  all
              existing authoritative  literature for accounting for income taxes
              and  requires  deferred tax balances to be adjusted to reflect the
              tax rates in effect  when those  amounts  are  expected  to become
              payable or refundable.  The Statement was applied in the Company's
              financial  statements  for the fiscal year  commencing  January 1,
              1993.

              At December  31, 1997 a deferred  tax asset has not been  recorded
              due to the Company's  lack of operations to provide  income to use
              the net  operating  loss  carryover  of $57,000  which  expires as
              follows:

<TABLE>
<CAPTION>
                                 Year Ended                                 Expires                    Amount
                   --------------------------------------     -------------------------------      --------------
<S>                <C>                                        <C>                                  <C>           
                              December 31, 1986                        December 31, 2001           $        1,950
                              December 31, 1987                        December 31, 2002                       10
                              December 31, 1988                        December 31, 2003                       10
                              December 31, 1989                        December 31, 2004                       10
                              December 31, 1990                        December 31, 2005                       10
                              December 31, 1991                        December 31, 2006                       10
                              December 31, 1996                        December 31, 2011                   51,186
                              December 31, 1997                        December 31, 2012                    3,814
                                                                                                   --------------
                                                                                                   $       57,000
                                                                                                   ==============
</TABLE>

              A change in control of the  Company  and a lack of  continuity  of
              operations  may  reduce or limit the  amount of the net  operating
              loss than can be used in future years.

NOTE 2:       DEVELOPMENT STAGE COMPANY
              The Company was  incorporated  under the laws of the State of Utah
              on April 16, 1986 as Zeus  Enterprises,  Inc.  and has been in the
              development stage since  incorporation.  On December 30, 1993, the
              Company was dissolved as a Utah corporation and  reincorporated as
              a Nevada  corporation.  On May 31,  1996,  the name was changed to
              Pacific Forest  Corporation.  The Company is currently looking for
              business opportunities.

                                       F-6

<PAGE>


                           PACIFIC FOREST CORPORATION
                          (A Development Stage Company)
                    NOTES TO FINANCIAL STATEMENTS (Continued)
                           December 31, 1997 and 1996



NOTE 3:       CAPITALIZATION
              On the date of incorporation, the Company sold 1,000,000 shares of
              its common stock for $2,000 cash for an average  consideration  of
              $.002 per share.  On  September  12,  1995,  the  Company  sold an
              additional 100,000 shares of its common stock for $50,000 cash for
              an average  consideration  of $.50 per share.  On October 12, 1997
              the Company issued 100,000 shares at $.05 per share to retire debt
              owed to its  officer.  The  Company's  authorized  stock  includes
              100,000,000 shares of common stock at $.001 par value.

NOTE 4:       RELATED PARTY TRANSACTIONS
              The  Company  neither  owns or leases  any real  property.  Office
              services are provided, without charge, by current management. Such
              costs  are   immaterial   to  the   financial   statements,   and,
              accordingly,  have not been  reflected  therein.  The  officer and
              director of the Company is involved in other  business  activities
              and  may,  in  the  future,  become  involved  in  other  business
              opportunities.   If  a  specific  business   opportunity   becomes
              available,  such person may face a conflict in  selecting  between
              the Company and his other business interests.  The Company has not
              formulated a policy for the resolution of such  conflicts.  During
              1997,  the President  forgave $2,621 of expenses paid on behalf of
              the  Company.  The  forgiveness  is  reflected  as a reduction  of
              general and administrative expenses.

NOTE 5:       GOING CONCERN
              The  financial  statements  are  presented  on the basis  that the
              Company is a going concern,  which contemplates the realization of
              assets and the satisfaction of liabilities in the normal course of
              business  over a reasonable  length of time. At December 31, 1997,
              the Company has a loss from  operations  for 1997 of $3,814 and an
              accumulated deficit of $57,000.

              Management  feels that loans from  related  parties  will  provide
              sufficient  working  capital to allow the Company to continue as a
              going concern.

NOTE 6:       ACQUISITION AND DISPOSITION OF SUBSIDIARY
              On June 28, 1996,  the Company issued 100,000 shares of Regulation
              S common  stock to acquire 67% of Pacific  Forest  (Fiji)  Limited
              ("Fiji").  On August 23,  1996,  200,000  shares of  Regulation  S
              common stock were issued to acquire the remaining 33% of Fiji. The
              Company  intended to operate a timber  milling  operation  in Fiji
              through the subsidiary.  By December 31, 1996, it was evident that
              the Company would not succeed in obtaining  the necessary  capital
              to   properly   fund  the  Fiji   operations.   Accordingly,   all
              transactions  related to the subsidiary  were canceled,  effective
              December  31,  1996.  The  financial  statements  for  1996 do not
              reflect any activities of the former subsidiary. Audited financial
              information  for  the  former  subsidiary  is  not  available  and
              management  believes  the  activities  are not  meaningful  as the
              operations no longer relate to the Company.


                                       F-7